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5 Ways Love and Marriage Can Make You Wealthier

Couples making their dinner reservations to celebrate Valentine’s Day may have something else to celebrate. From a long-term perspective, love and marriage can make you wealthier if done right. Obviously, two can live cheaper than one and living below your means is an integral part of financial planning, but wealth building in marriage is much more than that. Researchers at the Ohio State University’s Center for Human Resource Research found that married people had 93% higher wealth per person than singles – more than just simply adding up the wealth of two. Having a partnership opens up a wider range of financial strategies in your wealth building business.

Here are some examples of ways marriage can help create long-term wealth:

Cost savings. The key to marriage isn’t just that two can live cheaper than one. The power lies in the fact that marriage really helps the pocketbook where it counts. Rent or mortgage payments and health insurance are often the highest expenses individuals have and by permanently sharing a roof and by having more medical insurance choices, couples can live more inexpensively.

However, the key is saving the difference. If the savings just goes into lifestyle then it is wasted. When the cost savings is maximized by investing the difference, it is monumental. A couple making $100,000 a year who invests 25% of their income due to reduced expenses in marriage (and earns 6% on their investment) would have over $2 million dollars in 30 years.

Increased access to low cost credit. A credit score is tied to the individual; it is not determined jointly so that gives couples an opportunity to plan their debt strategically to maximize their options. For example, if you need a new vehicle at the same time you are saving for a new home, many wait until they make the home purchase for a new car since they don’t want the extra debt to affect their credit rating. When you have a partner with good credit, you can take out the home loan on the person who has the strongest credit rating and can carry the loan themselves. The vehicle loan can go under the other spouse’s credit.

A friend of mine was able to get a new home even after they sold their previous home in a short sale. The old home loan was under the husband’s name and when real estate values dropped like a rock in the Central Valley of California, he was able to sell the home on a short sale. The good news is they got out from under the property. The bad news is his credit took a massive hit. Hers didn’t. She wasn’t on the loan and they were able to buy a new property since she qualified for a new loan.

This saved them a lot of money in mortgage interest. According to MyFICO.com, the difference between a credit score of 640 and 740 can save you about $140 a month over 30 years on a $300,000 loan. That can subsequently be turned into just over $137,000 for retirement in 30 years at a 6% interest rate.

Favorable retirement income options. The Social Security Administration also provides favorable retirement income options for spouses. You can receive a spousal Social Security benefit even if you have never paid into the system by requesting half of your spouse’s benefit when they hit their normal Social Security age. If you paid into the system, you can choose between your own benefit and a spousal benefit once you hit your normal retirement age.

For example, when I hit age 67, I can take half of my husband’s Social Security benefit instead of my own. If he gets the top Social Security payout of $2,513 (based on 2012 figures), I could collect $1,256 a month on his benefit and let mine continue to accumulate until age 70 and then switch to my benefit. Let’s say my benefit is $2,000 a month. Since a Social Security benefit increases by about 8% for each year of delay, I could collect around $160 a month more by simply waiting just one year. If I waited to collect my benefit until age 70, I’d be able to collect about $480 a month more (while collecting half of his benefit in the meantime). For people with a long life expectancy, the “spouse then switch” Social Security strategy can be a significant wealth builder. Resource – Retirement Revised

Gifting. You can gift unlimited amounts between spouses, whereas if you want to gift to anyone else you can only give $14,000 a year per person without filing a gift tax return. Granted the estate tax exclusion was set at $5.25 million dollars per person but that doesn’t apply to spouses. You can gift all you want to your spouse.

Creating overall financial stability. Having two people contributing to a household helps financial stability in a number of ways. Emergencies are less devastating for one. For example, with two income streams, one partner’s job loss might be a hardship but not a 100% loss. It takes about 7 months to find a new job at the executive level ($100,000 plus positions). A couple might be able to live off one income and not even need to dig into savings to sustain a household – saving $58,000 from draining emergency savings.

Later in life or during periods of sustained illness, partners can care for each other instead of having to hire help. For example, hiring a home care personal aid can cost anywhere from $13 an hour to more than $30 an hour depending on what area of the country you reside. Married couples may be able to care for each other during periods of extended illness saving $3,120 – $7,200 per month.

Since marriage can contribute to significant wealth building, it makes sense to do more than just work on the marriage to keep it strong. It also makes sense to specifically work on the financial aspects of marriage. My husband and I often look back in wonder at how we actually made it through some of those tough early years. We did work on our marriage and date night had a lot of do with it. In fact, researchers Bradford Wilcox and Jeffrey Dew with the National Marriage Project at the University of Virginia found that couples who had a weekly “date night” or spent quality time together every week were approximately 3.5 times more likely to rate their relationship as “very happy.”

If you are married, consider adding another type of quality time together. Along with a weekly date night, set aside a “money night” to plan your future goals and how to fund them. You can use the time to track your budget, discuss investment strategies, and review important topics that people often procrastinate on such as taxes and insurance. Having some time set aside on a regular basis takes the pressure off touchy financial topics since you can always revisit them the next week. If you do like this idea, be sure to implement it right away. However, keep those dinner reservations for Valentine’s Day since I don’t recommend starting this on the evening of February 14th!

Nancy L. Anderson, CFP ® is a Resident Financial Planner at Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff Certified Financial Planner™ professionals. For additional financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.

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